The European Union has committed itself to increase the share of biofuels used in transport to 10% by 2020.

It is one of a package of measures to cut emissions of greenhouse gases like carbon dioxide (CO2).

The aim is to reduce the impact of climate change, as well as Europe's dependence on fossil fuels. But will it work?

In a laboratory on the outskirts of Copenhagen, a technician measures out beakers of a foamy brown liquid, seals them and writes out the label.

The beakers contain enzymes which could help break down wood and straw into biofuel that can be used in cars: what is known as second-generation biofuel.

It is one of the most important areas of research if the EU is to meet its 2020 binding target.

'Reduce oil dependency'

The chief executive of Novozymes, Steen Riisgaard, says second-generation biofuels will offer an 85% cut in carbon emissions, including the energy needed to produce them.

"We don't claim that this is the silver bullet that will save the world and the climate," he cautions. "This is one of many technologies we can bring to bear to reduce CO2 emissions and also our dependency on oil."

Novozymes estimate it will be four to five years before the second-generation fuels are on the market.

In the past few years, interest in biofuels has soared, thanks to the combination of high oil prices and concern about climate change.

But not all biofuels have the same carbon profile. The first generation are made from food crops, such as maize, rapeseed, palm oil and sugarcane.

The Danish government is among those who say first-generation biofuels are not sustainable.

Although it exempts first-generation fuels from the 3-eurocent-per-litre carbon tax on petrol and diesel, only research into the second generation qualifies for tax breaks.

"We think the CO2 account is not sufficiently good," says Hans Jorgen Koch, the Danish deputy state secretary for energy. "There's only a reduction of 10 to 15% if we use the first-generation technologies.

"And also, it requires a big effort of energy to convert (the raw materials) to first-generation biofuels."

Forests and food

There are other costs, too. A recent UN report warned that large sections of Indonesian forest were being cleared, often illegally, to make way for palm oil plantations. The forests soak up CO2, which would otherwise increase global warming.

In Mexico, there were riots in February after the price of maize quadrupled, pushed up by the demand for biofuels.

In Europe, more farmers are switching to biofuel crops, encouraged by rising prices and cuts in subsidies for food production. The Green Party in the European Parliament warns that this will put pressure on global food prices at the expense of the poor.

Denmark is already a leader in green energy. Much of Copenhagen gets its heat and electricity from biomass: wood and straw which is converted into pellets before being burnt in a specially adapted power station.

On his farm at Tureby, in central Denmark, Torben Lange uses a small tractor with two giant forks attached to the front to load bales of straw onto one of his lorries.

Each bale weighs more than 500kg (1,100 pounds). In all, he sends 16,500 tonnes of straw, most of it bought from neighbouring farmers, to a plant in nearby Koge, where it is made into pellets.

Dan Belusa of Greenpeace says biofuels have their own problems

"It's good for our business," Mr Lange says, "because straw prices have been very low for the past five or six years. So when they use the straw (for biopellets), the price will probably go up."

Ships take the pellets to the power station at Amager, on the coast near Copenhagen - the least environmentally damaging way of transporting them.

The environmental pressure group Greenpeace says Denmark simply does not have enough wood and straw both to supply the power station and to make second-generation biofuels.

"We already have a very efficient use of our available biomass. Nearly 90% of the energy is actually benefiting in the form of heat or power. If we take the same biomass and turn it into biofuels, we only have half that energy value," says Dan Belusa from Greenpeace.

And the petrol which would be replaced by biofuels has a much less damaging greenhouse effect than the coal which would be burned instead of biomass, he adds.

'Bio' petrol

At the Statoil filling station in Lyngby, motorists filling up with petrol are already putting a percentage of biofuel in their tanks.

Statoil is the only company in Denmark to market "bio" petrol. It began selling it at this petrol station 10 months ago and now offer it at two-thirds of their 300-odd stations.

The biofuel comes from a pool in Rotterdam, about 85% of which is produced in Europe. It is first-generation, but Statoil say it is sustainable, that the fuel takes less carbon to produce and transport than it generates when it is used.

"We have made some calculations, together with the Danish Ministry of the Environment, and that shows that Danish cars save about 120kg of carbon dioxide per year (from using the "bio" petrol)," says Statoil spokesman Per Brinch.

It will be another four or five years before second-generation biofuels are on the market.

Meanwhile, companies like Statoil are responding to consumer concerns about climate change and environmental sustainability.

The arguments around biofuels are complex. Environmentalists say the "bio" prefix misleads people into believing such fuels must be environmentally friendly.

But isn't there a risk that such criticisms leave consumers feeling powerless and unwilling to change their behaviour if it is unlikely to make a difference?

"It is very important that the individual acts on addressing climate change," says Dan Belusa from Greenpeace. "But it's also important that the politicians put the subsidies in the direction where they're going to make a difference."